The Bank of England base rate is still at 0.5% where it has been since 5 March 2009. Will it continue to stay this low for the foreseeable future or will we start to see an increase or two in the forthcoming months? I have today read that the central bank of Australia put up rates from 4.5% to 4.75%, surprising markets with the first rise since May. India's rise, the sixth this year, was less unexpected. The Reserve Bank raised the repo rate, the rate at which it lends to banks, to 6.25% from 6%. It raised the reverse repo rate - the rate at which it borrows from banks - to 5.25% from 5%.
In the UK we have seen some interesting periods in relation to the base rate, for example between 30 June 1932 and 24 August 1939 the base rate saw no changes and was held at 2%, similarly between 26 October 1939 and 8 November 1951, the rate was unchanged at 2.5% - a 12 year period.
The highest rate on record came on 15 November 1979 when the rate was 17% and stayed there for nearly 8 months before dropping to 16% in July 1980.
It wasn't until the early 90's though that we started to see rates consistently sit below the 10% mark where they have been ever since. It's worth noting that the highest rate in recent times was 7.5% between June and October 1998, just over 12 years ago.*
What will happen next, well only time will tell, but for now my personal opinion is that even if the Bank of England Base Rate does increase, it will be a while before it gets uncomfortable for those with an existing Tracker Mortgage.
*Source: www.bankofengland.co.uk
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